International Trading Blocs

International Trading Blocs

International Business Revision Textbook

Introduction to International Business

  • International business refers to commercial activities that happen between two or more countries.
  • Activities can include transactions in goods, services, resources, knowledge, and skills.

Advantages of International Business

  • It provides access to larger markets and a larger customer base.
  • It offers greater opportunities for growth and expansion.
  • It permits risk diversification by distributing investments among different countries.

Disadvantages of International Business

  • It involves dealing with differences in language, culture, laws, and regulations.
  • It increases the risk of currency fluctuations and political instability.
  • There is a higher risk of trade restrictions or tariffs.

Significance of International Trade Laws

  • International trade laws regulate how businesses operate internationally.
  • Understanding these laws is vital for businesses to operate legally and ethically.

Modes of Entry into International Business

  • These can include exporting, licencing, franchising, joint ventures, acquisitions, and greenfield investments.

International Business Considerations

  • The choice of entry mode often depends on factors such as target market characteristics, industry structure, and company capabilities and objectives.
  • Businesses must consider the economic, social, and political conditions of the country in which they plan to operate.

Role of Technology in International Business

  • Technology makes long-distance communication possible and can increase efficiency and coordination in international business.
  • E-commerce has significantly expanded the potential of international business by eliminating geographical boundaries.

Elements of Culture

  • Differences in language, religion, customs, and social norms must be respected and understood in international business.

International Business Strategy

  • Firms have to create strategies that coordinate their activities across borders and deal with cultural differences and foreign competition.

Factors Affecting International Business Environment

  • A range of factors can affect the international business environment, such as GDP, inflation, political stability, infrastructure, education level and skill level of the population in the respective country.